Pop Mart growth slows as Labubu craze cools, net profit misses forecast

The global craze over Labubu, the character doll that propelled Chinese toy company Pop Mart to international fame, has begun to cool, putting the brakes on the company's once-explosive growth. Sales continued to rise, but the pace slowed sharply compared with the same period last year, and overseas revenue declined.

According to Bloomberg and other outlets, Pop Mart posted first-half sales of 17.2 billion yuan ($2.55 billion) this year, up 24 percent from the same period a year earlier.

However, the figure marks a steep deceleration from the first half of last year, when sales surged more than 200 percent on the back of the Labubu boom. Net profit came in at 5.04 billion yuan, falling short of the market consensus of 6.6 billion yuan.

By region, sales in mainland China, Hong Kong, Macao and Taiwan rose 47 percent year on year, while overseas revenue fell 11 percent.

Pop Mart currently operates more than 80 stores in the United States and plans to expand that number to over 100 by year-end. The company has more than 400 stores on the Chinese mainland.

Pop Mart recorded explosive growth last year after Blackpink member Lisa and pop star Rihanna introduced Labubu products on social media, with some observers saying the company had transcended the limits of a Chinese toy maker.

But as the Labubu frenzy has eased, a new challenge has emerged: whether the company can develop a single popular character into a durable, long-term intellectual property.

Analysts note that Pop Mart is not alone — some other Chinese consumer brands that rode social media buzz to rapid growth face similar questions about sustainability.

Chinese jewelry brand Lao Pu Huang Jin and beverage company Chagee also posted strong short-term growth, but maintaining that momentum is proving difficult amid slowing economic growth and weakening consumer spending.

Pop Mart is seeking a way forward by nurturing Labubu and its other popular characters into long-term entertainment intellectual properties.

Bloomberg noted, however, that establishing itself as a global IP company will take considerable time for Pop Mart, given the decades of brand recognition built by Disney and Japan's Sanrio, the company behind Hello Kitty.